Abercrombie & Fitch ceases talks with potential buyers
US giant Abercrombie & Fitch has ceased talks with potential buyers having revealed in May that it had been in talks with several bidders.
Reuters reports that firms, including private equity house Sycamore Partners and retailer American Eagle Outfitters had been interested in purchasing the business which has a market valuation of around $650m, but had failed to strike a deal. It had been reported in May that Abercrombie had hired an investment bank to field interest from potential bidders.
Shares in the retailer plunged by around 20% yesterday (to $9.64) on the back of the news and several other retailers' share prices were also hit including Gap, American Eagle Outfitters and Express.
Abercrombie's executive chairman Arthur Martinez said the decision to end the talks came after reviewing "all the relevant factors" and after consultation with its advisers. "[...] the A&F Board of Directors determined that the best path to enhance value for stockholders is the rigorous execution of our business plan," he said.
"We believe in the prospects for our business and the opportunities for our brands. We are generating solid comp store sales momentum at Hollister and continue to refine and implement strategies to position the Abercrombie brand for revitalised performance. Our strong management team and dedicated people, the investments we have made in marketing, omnichannel and other strategies to drive sales, together with our relentless focus on operational efficiencies, all contribute to our expectation for improved trends beginning in the second half of the year, compared to the prior year period," Martinez added.
Last year the business, which was founded in 1892, revealed a refreshed brand image designed to make it more inclusive and to heighten its appeal to millennials. It operates around 900 stores globally under the Abercrombie and Hollister (its surf-inspired brand).
